Kungsleden AB (publ.) (”Kungsleden”) has extended the fixed interest term on its borrowing by entering into new interest rate swaps for the purpose of stabilizing cashflows and profits from property management in the coming years. The measure is financed partly by early termination of old interest rate swaps with low hedging effect.
Kungsleden has entered into new interest rate swaps with total amount of SEK 4 billion at today´s interest rates. Of this SEK 3 billion is so-called forward starting swaps on a 3 years term starting at the beginning of the year 2020. Additional interest rate swaps with a nominal amount of SEK 1 billion has been entered into with immediate start and duration until the end of 2025.
Old interest rate swaps with a total nominal amount of SEK 3 770 million with short maturity has meanwhile been terminated early. In parallel, other existing swaps has been extended to provide further protection against rising interest rates.
The restructuring reduces the interest rate risk. The restructured portfolio gives a better protection if the short Stibor 3-month interest rate after 2019 would be higher than currently priced in the fixed-income market.
The average fixed interest term of the borrowing increases pro forma 31 March 2018 from 2.0 years to 3.1 years. Approximately 60 per cent of the total borrowing has a fixed interest term of more than 1 year. The interest-rate sensitivity will amount to SEK 3.6 million per basis point after restructuring compared to SEK 2.3 million before. This means that the market value of the interest rate swap portfolio would rise with SEK 360 million if interest on all maturities would increase by 100 basis points (one percentage point).
The measures means that the average funding cost drops further from 2.1 per cent to 2.0 per cent.
After the measures the maturity structure of loans and interest rate swaps will be as below (pro forma 31 March 2018)
For more information, please contact:
Biljana Pehrsson, CEO of Kungsleden | 46 (0) 503 052 04 |
Anders Kvist, Deputy CEO and CFO of Kungsleden | 46 (0) 503 052 11 |
Detta pressmeddelande finns tillgängligt på svenska på www.kungsleden.se/pressmeddelanden
The information was provided for public release on May 4, 2018 at 2:00 p.m.
Kungsleden is a long term property-owner that provides attractive, functional premises that enrich people’s working days. We create value by owning, managing and developing offices and other commercial properties in Stockholm and Sweden’s other growth regions. A large portion of our properties belong to attractively located clusters where we also engage in the development of the whole area. Kungsleden’s goal is to deliver an attractive total return on our properties and for our shareholders. Kungsleden is listed on NASDAQ Nordic Large Cap.